Is shedding normal of existing hair around grafts? & Is shaving/ colouring sides of hair allowed?

You really should check with your doctor for post-operative care.  You can read about what other doctors may advise on the Internet but that may be something YOUR doctor does not agree with.  Later on, if your transplant isn't successful, then your doctor may blame you for not following your doctor's instructions.Hair thinning or hair loss after surgery may be shock hair loss.  

Occasionally, non-transplanted hairs in telogen (or the 'resting' phase
of the hair growth cycle) will fall out after hair transplantation. The
risk of telogen effluvium is greater in large procedures. The hairs will grow back over time.After one week following a FUE procedure, I typically allow my patients to cut their non-transplanted hairs to 'balance" out their hair.  i work with a hair stylist who is used to cutting my patients hair after FUE to avoid uneccesary trauma to the grafts during the haircut. 

Yes shedding like you describe can occur and it is sadly normal but doesn't necessarily always happen. Minixidil in the build up to your surgery and from about a week afterwards can help.i don't see s problem with clipping your donor hair at this point,it might be a bit early to colour your hair to avoid inflaming or irritating your recently operated on scalp. Best to wait a little longer maybe another 10 days of so.

Yes this can be normal and can last a while.  Often, but not always, it reverses.  You should consider regular follow ups with your doctor if you have any concerns. 

Thinning of the residual hair could be shock loss which is most often protected with he drug Propecia. IF your not on the drug, you should be on it nowYou can clip your hair to any length after 2 weeks provided that all crusts are off your head.